The growth of household loans extended by South Korean financial firms accelerated in February from the previous month on the back of gains in home-backed lending, the central bank said Friday.

Household lending handled by local banks and non-bank institutions totaled an outstanding 599.2 trillion won ($551.3 billion) as of the end of February, up 3.2 trillion won from the previous month, according to the Bank of Korea.

The February increase compared with a 30 billion won expansion tallied in January.

Banks’ household loans including home-backed lending grew by 2.2 trillion won on-month to 433.4 trillion won as of end-February, the BOK said. Banks’ home-backed lending grew 1.8 trillion won to 287.8 trillion won, faster than the 1.5 trillion won expansion in January.

The government decided last August to temporarily ease mortgage lending and tax rules to bolster the housing market. But it recently re-tightened such rules in a bid to curb excessive growth of household debt. Ballooning household debts are a main source of concern for policymakers as Korean households are feared to carry heavier burdens to service debt amid rising interest rates.

The BOK froze the key interest rate at 3 percent on Tuesday amid lingering economic uncertainty. But the bank said it plans to take baby steps toward tighter policy down the road. It hiked the borrowing costs by a total of 1 percentage point since July last year. 

(Yonhap News)